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If you fall behind long enough on your obligation to pay your taxes, the Internal Revenue Service (IRS) can put a tax lien on property you own, including your home, investment property, bank accounts, and vehicles. You cannot sell them or refinance a loan on them until you get the lien removed.
Liens can cause economic hardship for a taxpayer. Anyone who is experiencing a lien, or has received notice of a possible lien, and has a tax debt in excess of $50,000, should speak to a knowledgeable tax lawyer from Pontius Tax Law. An Alexandria lien resolution lawyer provides value by assessing the best way to remove it and to pay the debt.
Liens are claims against property to ensure creditors get the money they are owed. Mortgages, for example, are a form of lien generally paid in installments and removed when the agreed upon amount is paid off. Although tax liens no longer appear on credit reports, a person’s credit can still take a hit if one is placed on their property. The IRS can issue a public notice alerting creditors that it has filed a tax lien on a piece of property, which impacts the ability to borrow against the property, refinance a mortgage, or secure a loan from a financial institution.
The IRS may impose a lien if a taxpayer goes some time without paying the owed amount, which may prevent them from selling their house, among other things. If too much time has passed without answer, the IRS could send a Notice of Federal Tax Lien (Letter 3172).
The taxpayer must respond to the Notice within 30 days if they wish to request a Collection Due Process hearing. A lien resolution attorney in Alexandria could assist with this response and provide avenues for payment.
The most direct way to remove the lien is to pay the full amount of tax owed but this is not always an option for some taxpayers. Alternatively, the IRS could discharge a lien, which allows the owner to sell the property on the condition that the proceeds go to the government.
With an installment agreement, the taxpayer can set up a plan of monthly payments until the debt is satisfied. Debts of under $25,000 could see the lien removed immediately if the installment agreement is accepted. With the tax lien removed, the taxpayer is much more likely to access the equity in the property or refinance it at a lower interest rate.
Delinquent taxpayers could also apply for an Offer in Compromise, which is an agreement to pay less than is currently owed to release the lien. If the taxpayer is not being audited or going through bankruptcy, they may be eligible. They must be current on filing their tax returns and must make an estimated payment on them for the current year.
In certain situations, it is also possible to file for Currently Not Collectible Status, which essentially halts collection efforts until the taxpayer is in better financial standing.
In some situations, the IRS will agree to subordination, giving up its standing as a priority lienholder on a property. This allows a taxpayer to refinance it by presenting the Certificate of Subordination to refinance the loan. They could take advantage of the equity they built and use it to pay the back taxes. Consult with an experienced lien resolution attorney to determine if subordination is a viable option.
When you receive notice that the IRS plans to place a lien on your property, consult with us at your earliest convenience. Even if you do not have the money to pay your debt right now, it is still highly beneficial to have someone advocating for you and strategizing ways to mitigate the effect of the lien. An Alexandria lien resolution lawyer is dedicated to improving your financial situation through experienced advocacy.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.
